Why Ireland's housing bubble burst • Hacker News Board

Re: Why Ireland's housing bubble burst

#91

Post by chgs » Sun, Mar 31, 2024, 9:29 AM UTC

refurb wrote: post #39

wredue wrote: post #2

I’m not sure what’s different, but I will chime in to say that I’ve been reading about Canada imminent bubble burst for 15 years. I mean, eventually someone may be right, but had I let this get to me and not buy my house 12 years ago, I would be in a much worse position today. Be careful with people trying to predict how markets will move.

Canada had a massive housing crash in 1990. Housing pricing dropped in Toronto by 30% on average (less in the core, up to 50% in the suburbs). Home owners were screaming for relief. If you bought in 1989, you didn’t break even accounting for inflation until 2005 or later. The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people…

People comparing income multiples in the 80s with today aren’t factoring the increased number of two income families, or even more. In london there are many houses which in the 80s had one income, maybe one and a part time which today have 4 or 5 incomes in a HMO.

Meanwhile empty housing is at very low levels and barely makes a dent (about 1%)

When you have 4 professional adults sharing a 3 bedroom house, there’s a supply shortage.

Re: Why Ireland's housing bubble burst

#92

Post by CalRobert » Sun, Mar 31, 2024, 9:58 AM UTC

tmnvix wrote: post #89

CalRobert wrote: post #74

Earlier quoted context omitted.

Ireland taxes income and capital gains very heavily, and has some truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's). I remember how much it stung handing over 52% of my options to the government so they could waste it on being stupid and incompetent. They even have a history of going after people's private retirement savings after the fact - https://www.oireachtas.ie/en/de…

A similar story in NZ. 0% tax on capital gains when selling a property. There is a so-called 'brightline test' which means that if you hold a property for less than two years or purchase a property with the intention of selling it for a profit you are expected to pay tax on those gains, but in practice this doesn't happen. Still waiting for the day that the tax department gets serious about questioning people's inten…

The dialog about this in Ireland is "you can't tax HOUSES that's your gran's HOME you MONSTER!" (gran lives in dun laoghaire, poor thing) but 4 people renting a flat commuting to Dublin from Athlone with a few euro in trading212 or whatever are robber barons who should be taxed to the hilt. Not to mention the health service is appallingly bad and getting anything done takes an eternity.

And I failed to mention, it's not just the lack of capital gains tax, it's the lack of meaningful property tax. My own prop taxes were €103 a year (for a dump in Offaly admittedly) but they're close to zero for the most part.

So local renters work hard and pay mountains of tax to provide infrastructure (though most of it is crap stroads admittedly) making your own house worth more, so making you richer, and that value is never captured at any point or allowed to help the people who made it possible.

Re: Why Ireland's housing bubble burst

#93

Post by robocat » Sun, Mar 31, 2024, 11:17 AM UTC

tmnvix wrote: post #89

CalRobert wrote: post #74

Earlier quoted context omitted.

Ireland taxes income and capital gains very heavily, and has some truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's). I remember how much it stung handing over 52% of my options to the government so they could waste it on being stupid and incompetent. They even have a history of going after people's private retirement savings after the fact - https://www.oireachtas.ie/en/de…

A similar story in NZ. 0% tax on capital gains when selling a property. There is a so-called 'brightline test' which means that if you hold a property for less than two years or purchase a property with the intention of selling it for a profit you are expected to pay tax on those gains, but in practice this doesn't happen. Still waiting for the day that the tax department gets serious about questioning people's inten…

Nitpick: Your information on the brightline test seems incorrect.

AFAIK: Intention doesn't matter for property - instead the brightline rule matters. Intent matters for NZ shares. Intent matters for foreign shares costing The bright-line capital gains tax rules look at the purchase and sale dates and there's a bunch of extra conditions so it can't easily be avoided.

  The bright-line property rule looks at whether the property was acquired:
  • on or after 27 March 2021 and sold within 5 years for qualifying new builds or within 10 years for all other properties
  • between 29 March 2018 and 26 March 2021 and sold within 5 years

  Changes are coming
  For properties sold on or after 1 July 2024, the bright-line property rule will only apply if the property is sold within 2 years of acquiring it.

https://www.ird.govt.nz/property/buying-and-selling/when-you...

Re: Why Ireland's housing bubble burst

#94

Post by ptrott2017 » Sun, Mar 31, 2024, 11:19 AM UTC

tmnvix wrote: post #88

chgs wrote: post #85

Earlier quoted context omitted.

Number of empty properties in Ireland dropped by 9% from 2016 to 2022

Interesting. Could you share a source?

Not the OP but suspect the source is this:

https://www.cso.ie/en/releasesandpublications/ep/p-cpr/censu...

Re: Why Ireland's housing bubble burst

#95

Post by robocat » Sun, Mar 31, 2024, 11:32 AM UTC

pixelatedindex wrote: post #69

tmnvix wrote: post #5

> Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared , before crashing by more than half between 2007 and 2012. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

> Demand comes in two forms. Demand for housing and demand for property investments. We should not lose site of the drivers of the second type of demand. Has the US ever lost sight of the second kind? To me (as someone who feels hopeless about home ownership) that seems to be the only demand we care about. There’s barely anything new being built, constant blocking by NIMBYs, and investors buying up so much property w…

Homes are hovering about 65% owned by occupiers in the US, chart: https://en.m.wikipedia.org/wiki/File:Home_Ownership_rate.png

So I presume the other 35% is investors? And obviously banks actually own most of your home until you've paid the mortgage in full.

https://en.m.wikipedia.org/wiki/Homeownership_in_the_United_...

Re: Why Ireland's housing bubble burst

#96

Post by robocat » Sun, Mar 31, 2024, 11:59 AM UTC

tmnvix wrote: post #90

lostlogin wrote: post #59

Earlier quoted context omitted.

There has been an absolutely huge amount of building going on - and while developers are sensitive to mortgage rates, they would have started building prior to interest rate increases. That said, had building slowed? It’s building sites everywhere I go.

Consents are certainly down. I spoke with someone that helps developers with submissions and interestingly they said they are really busy right now. Turns out though, they aren't busy with new consents but 'minor amendments' - the purpose of which is to reset the 5 year timeframe for the original consent. In other words, they don't want to go ahead right now.

There's a graph of consents in this link that shows a huge drop in consents in last two years:

https://www.stats.govt.nz/information-releases/building-cons...

Re: Why Ireland's housing bubble burst

#97

Post by robocat » Sun, Mar 31, 2024, 12:04 PM UTC

skeeter2020 wrote: post #9

wredue wrote: post #2

I’m not sure what’s different, but I will chime in to say that I’ve been reading about Canada imminent bubble burst for 15 years. I mean, eventually someone may be right, but had I let this get to me and not buy my house 12 years ago, I would be in a much worse position today. Be careful with people trying to predict how markets will move.

Canada's population just grew by a million people in 9 months; that's like 3%+ annualized growth. Add to that specific regions (Alberta just experienced net migration from every province and territory) and I find it hard to believe that anyone can predict "property bubble" with accuracy greater than 20 years resolution. I'm sure that won't stop so pundit from claiming victory when the music stops (or slows) and they…

Listened to podcast linked here: https://news.ycombinator.com/item?id=39878136

Talks about Ontario having immigration of 1.2 million but 800000 is temp visas for study.

Be careful with that million population growth number - it might not mean what you think!?

Re: Why Ireland's housing bubble burst

#98

Post by mandmandam » Sun, Mar 31, 2024, 12:07 PM UTC

datascienced wrote: post #44

mandmandam wrote: post #14

Gary Stevenson [0] is the only economist who makes sense to me on this issue. He mostly speaks about the UK but we're basically all in similar boats with house prices across the English speaking world. Gary put his money where his mouth is, and was the world's most successful trader for three years running. However, since he talks in a candid and coherent manner about inequality and the stunts the ultra-wealthy pull,…

I like the video. But I just can’t imagine “The Rich” hoarding lots of cash to lend out? Look at Donald Trump unable to get cash at hand for example to pay a fine that is a fraction of his worth. I think the rich will be heterogenous in their assets but most will have non cash assets and borrow when they need cash. Having money out of asset markets so they can time the market based on interest rates doesn’t seem like…

> I just can’t imagine “The Rich” hoarding lots of cash to lend out?

Um. What do you think mortgage lenders are doing? Or banks in general? ... And who do you think owns those institutions and profits from them?

Re: Why Ireland's housing bubble burst

#99

Post by dctoedt » Sun, Mar 31, 2024, 12:38 PM UTC

rayiner wrote: post #45

skeeter2020 wrote: post #11

Earlier quoted context omitted.

I'm interested that you used the word "absurd" - how come? Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...

> Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth... Define "success?" Mass immigration to America from continental Europe eventually culminated in the 20th century in the dismantling of the American constitution and the republic the founders created. The resulting country is also completely ungovernable. G…

> The resulting country is also completely ungovernable.

Another way to look at it: By any reasonable measure — and for all its indisputable problems — the U.S. is clearly the most successful large, multi-ethnic society in all of human history. Sure, it's always a work in progress. But let's consider the movie, not just the freeze-frame.

When people can vote with their feet, it says something that net migration to the U.S. seems to dwarf that to, say, China [1] or India [2].

[1] https://en.wikipedia.org/wiki/Immigration_to_China

[2] https://www.indiaspend.com/governance/millions-of-indians-se...

Re: Why Ireland's housing bubble burst

#100

Post by rayiner » Sun, Mar 31, 2024, 2:06 PM UTC

dctoedt wrote: post #99

rayiner wrote: post #45

Earlier quoted context omitted.

> Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth... Define "success?" Mass immigration to America from continental Europe eventually culminated in the 20th century in the dismantling of the American constitution and the republic the founders created. The resulting country is also completely ungovernable. G…

> The resulting country is also completely ungovernable. Another way to look at it: By any reasonable measure — and for all its indisputable problems — the U.S. is clearly the most successful large, multi-ethnic society in all of human history. Sure, it's always a work in progress. But let's consider the movie, not just the freeze-frame. When people can vote with their feet, it says something that net migration to th…

The US already had the highest standard of living in the world at the time of independence, before it became a multi-ethnic society. The country de Tocqueville wrote about was an overwhelmingly British country. The subsequent trajectory of the US has been one of chipping away at that foundation. The accommodation of vast numbers of immigrants from societies that had no tradition of self government, and little in the way of unifying cultural traditions, created a top-down society that can scarcely be called America.

Looking at migrants is a misleading indicator of preference, because the choice to emigrate is an aberrational one. Just 7-8% of people in south or east Asia would emigrate if they had the choice: https://news.gallup.com/poll/245255/750-million-worldwide-mi....